Surveys conducted before and during the pandemic show the coronavirus crisis may be reshaping the role of the CFO, with senior finance executives shifting their focus to crafting strategy and generating business value.
CFO Research (part of Argyle Advisory and Research Services) and Grant Thornton surveyed 631 CFOs and other senior finance executives in February, then followed up with a survey of 174 CFOs and senior finance executives in May, to gauge the effects of the COVID-19 upheaval.
Besides the changing focus of CFOs, the surveys revealed widescale delays for innovation projects, a renewed appreciation for business strategy skills, cybersecurity expense increases, and love for advanced analytics and artificial intelligence.
The February and May surveys showed that the role of the CFO shifted when the pandemic hit. In both surveys, the executives were asked how much of CFOs’ time would be spent in these four roles: strategist (crafting corporate strategy); change agent (generating business value); producer (standardizing and automating transactional processes); and guardian (standardizing control and compliance processes).
In February, the survey respondents reported that CFOs’ time was divided relatively equally across the four roles. But by May that balance had shifted in response to the COVID-19 crisis: strategist and change agent roles were taking more of CFOs’ time compared with the producer and guardian roles.
Despite the apparent shift to more forward-looking tasks, the coronavirus forced a large majority of CFOs to put off or change their plans for innovation projects. Eight out of 10 surveyed finance executives had delayed or reshaped innovation projects in May. Sixty-two percent of the respondents reported that the COVID-19 crisis had delayed their transformational projects while 19% said the crisis had reshaped their projects and they were pursuing a different approach. The remaining 19% reported that the crisis had accelerated transformation projects.
Delaying and reshaping innovation projects doesn’t mean they are extinguished. More than 90% of 335 finance professionals polled during a Grant Thornton webinar in June said they planned to continue to innovate, even during the COVID-19 downturn.
Advanced analytics and artificial intelligence were favored categories of automation technology in both the February and May surveys.
A majority of the executives in the May survey reported that their plans for implementing automation technologies had not been delayed by the pandemic. More executives slated advanced analytics for accelerated implementation (29%) than they did any other category of technology. Artificial intelligence was a close second at 23%.
The February survey had asked executives when they expected to implement a list of specified automation technologies. Most respondents (55%) had already implemented advanced analytics. Optical character recognition was the second-most-already-implemented automation technology, at 40%. Artificial intelligence had the highest percentage of planned implementations within 12 months (33%), followed by robotic process automation (30%).
In a December 2019 recession preparedness survey by Grant Thornton, 70% of respondents reported plans to increase their digital investments in innovation/technology, digital transformation, and/or cybersecurity, even amid growing signs of a slowdown. In the February CFO survey, about 70% of the senior finance executives reported they had either implemented key emerging technologies or they would be implementing them within two years.
When asked in May about how expenses would change over the next year because of COVID-19, cybersecurity had the highest percentage of executives projecting increases (44%) followed by IT/digital transformation (40%), training and development (22%), operations (21%), and marketing (19%). Not surprisingly, the categories with the lowest projections for expense increases were travel (4%), real estate (6%), recruiting (7%), and workforce (7%). Ninety percent of the executives projected their travel expenses would decrease.
Fitting with the finding of CFOs seeing themselves in more strategic roles during the pandemic, the finance executives surveyed held business strategy skills in high regard.
They saw business strategy as an important skillset both before and after the onset of the pandemic. Operations management skills were nearly as valued as business strategy skills in the pandemic crisis environment. When finance executives were asked which important skill they had leveraged because of the coronavirus crisis, the most-cited answer was business strategy, chosen by 34% of the executives, followed by operations management (29%). Data analytics and innovation/entrepreneurship were tied as the third-most-cited top skills drawn on during the pandemic, at 10%.
The February survey asked a related question — what were the most important skillsets respondents would like to develop within their finance function? Data analytics and business strategy were the most-cited answers, by 23% and 22% of the respondents, respectively, followed by application development (17%) and customer experience management (11%).
There’s no doubt that business strategy development was not the only added responsibility for CFOs arising from the pandemic-induced recession.
Among the short-term priorities and lasting impacts of the pandemic, the executives in the May survey individually listed:
• reduced capex;
• the potential to purchase less-well-capitalized companies;
• reduced cash flow impacting debt covenants;
• resource prioritization in the face of constrained supply chains; and
• long-term implications of an increasingly mobile workforce on office space, recruiting, and travel.
Most of those impacts will continue to have a large influence on what CFOs spend their time on in the coming months. Respondents said they were seeing CFOs branching out into new areas of organizational leadership, such as leading production and processes, managing layoffs and shuttering operations, working with business units to establish multiple manufacturing sources, managing remote workforces, partnering with the community, and interacting with investors.
Within the traditional scope of finance, new areas of focus for some finance chiefs included acquisitions and divestitures, moves to preserve cash and resources, coronavirus financial-impact models, investment risk, forecasting and budgeting, payments and cash flow management, risk mitigation, liquidity management, revenue development, and cost reduction. Paycheck Protection Program documentation and analysis also appeared on the list.
Among the new areas of focus within technology leadership, finance executives listed moving all functions to paperless, implementing work-from-home technologies, and overseeing IT and security.
And one executive listed a-not-unfamiliar CFO role:
Keith Button is a freelance writer based in Valley Cottage, N.Y.